Hyderabad: It is important to have a tax-saving plan. Different individuals look for different options. Those looking for safe schemes can go for the tax-saving fixed deposits offered by the banks and non-banking financial companies (NBFCs). Everybody should consider tax saving an important part of their yearly financial plans.
A tax-saving fixed deposit (FD) is an investment option which offers multiple benefits of tax exemption, safety and a reasonable interest rate. These FDs offered by banks are considered safe schemes to invest your hard earned money. Many investors are subscribing to these considering their guaranteed returns and interest rates of nearly 7 percent.
Those, who want to save tax, can consider taking these FD schemes before the current financial year comes to an end. Section 80C of the Income Tax Act, 1961, allows a deduction of up to Rs 1,50,000 on investments made in various tax saving schemes. One of these schemes is tax saving fixed deposits. The amount deposited in these schemes can be claimed up to the limit of Section 80C.
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To claim tax exemption, individuals and Hindu Undivided Families (HUFs) can invest in these fixed deposits. These deposits can be opened in the bank where you already have an account or in any other bank. The interest earned on these deposits should be included in the total income. Tax is payable based on applicable slabs.
The TDS (tax deducted at source) is levied when the interest received from a deposit in a bank exceeds Rs 40,000 in a financial year. This TDS can be exempted by filing Form 15G and Form 15H. The interest income on the FDs for senior citizens is tax free up to Rs 50,000.
However, there are certain aspects that one must consider before going for these schemes. The tenure for a tax-saving fixed deposit is five years. It is not possible to withdraw money from these during this lock-in period. Also, no loan can be taken as security on these FDs. The interest rate on these deposits varies from bank to bank.
